HSBC to stop retail banking in Maldives
In this article (5)
Banking giant Hong Kong and Shanghai Banking Corporation (HSBC) is to cease retail banking services in Maldives from April. We understand that the Male branch of HSBC had decided to cease retail banking operations from April 28 and is now informing its customers.
An official from the Maldives Monetary Authority (MMA) also confirmed the plans by HSBC’s Male branch to shift to corporate-only operations. The official, however, did not give details.
HSBC was not available for comment.
HSBC operates in Maldives as a trading desk of the HSBC branch in Sri Lanka.
An account in HSBC has to be opened with an initial deposit of MVR 50,000; the highest initial deposit required of any bank that operates in Maldives. The bank also pays the lowest deposit interest rate at 1 – 1.75 percent. Deposit interest rate on US Dollar accounts is 0.10 percent.
As the bank charges a high amount in fees, the bank mainly hosts Maldivian businesses.
In May 2014, complaints mounted over the bank’s decision to close down accounts held by many small and medium businesses citing administrative reasons. The businesses had complained that the move was made without prior notice.
The decision by one of the biggest banks in the world comes a week after it was revealed that the Maldives had lost a major international banker.
President Abdulla Yameen Abdul Gayoom told residents of Gaafu Dhaal atoll Gadhdhoo on February 15 that one of the major correspondent banks had dropped Maldives from its client list, while another one is considering a similar move. The reason, according to the president, is false claims made about Maldives, including threats posed by home-grown jihadists.
“When we make such claims without considering the repercussions, it’s the people of Maldives that has to suffer,” he said, after inaugurating a project to establish a clean water system in the island.
The president did not identify the bank that had dropped the Maldives. Haveeru, however, understands that US-based JPMorgan Chase had terminated its dealings with Maldivian banks in 2013.
A correspondent bank is a financial institution that provides services on behalf of another, equal or unequal, financial institution. It can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution.
Questions & Answers
Q.What kind of services will HSBC continue to offer in Maldives after April?
What kind of services will HSBC continue to offer in Maldives after April?
From April, HSBC's Male branch will shift to corporate-only operations. It will cease providing retail banking services to customers in Maldives.
Q.Why might Maldivian businesses choose HSBC despite its high fees and low interest rates?
Why might Maldivian businesses choose HSBC despite its high fees and low interest rates?
The article states that HSBC mainly hosts Maldivian businesses. This is despite its high initial deposit requirement, high fees, and low deposit interest rates.
Q.Was this HSBC decision the only recent instance of a major bank withdrawing services from Maldives?
Was this HSBC decision the only recent instance of a major bank withdrawing services from Maldives?
No. The President stated a major correspondent bank had dropped Maldives from its client list a week prior, with another considering similar action. JPMorgan Chase reportedly terminated dealings in 2013.
Q.What reasons did the President give for major banks withdrawing or considering withdrawal from Maldives?
What reasons did the President give for major banks withdrawing or considering withdrawal from Maldives?
The President attributed the withdrawals to false claims made about Maldives, including threats from home-grown jihadists. He highlighted the suffering this causes the people of Maldives.
Reader pulse
HSBC's Maldives retail exit:
21,282 votes so far